ICAEW chart of the week: Home Office financial statements 2022/23

The Home Office spent £24.5bn in 2022/23 according to its recently published annual financial report, funded by £5.4bn in income and £19.2bn in net parliamentary funding.

Column chart showing main components of the Home Office financial statements 2022/23.

Column 1: Net parliamentary funding £19.2bn

Column 2: Income £5.4bn = Customer contracts £3.7bn + Other income £1.7bn 

Column 3: Expenditure (£24.5bn) = Police grants (£9.2bn) + Other grants (£5.6bn) + Goods and services (£4.3bn) + Staff costs (£2.4bn) + Other operating costs (£3.0bn)

21 Sep 2023.
Chart by Martin Wheatcroft FCA. Design by Sunday.
Source: Home Office, 'Annual Report and Accounts 2022/23'.

The Home Office published its Annual Report and Accounts for the year ended 31 March 2023 on 19 September 2023. 

Net expenditure in 2022/23 was £19.1bn, comprising expenditure of just over £24.5bn net of income of £5.4bn, while parliamentary funding net of other items amounted to £19.2bn.

The Home Office breaks down its income for the year of £5.4bn between revenue from contracts with customers of £3.7bn and other income of £1.7bn. The former includes £2.2bn from visa and immigration charges, £0.6bn in passport fees, £217m for the disclosure and barring service (DBS), and £0.7bn from other sources. Other income is primarily comprised of immigration health surcharges payable by foreign residents and visitors for the use of the National Health Service, a proportion of which is transferred to the Department of Health and Social Care and the devolved administrations.

As our chart this week illustrates, the majority of the Home Office’s spending is in the form of grants. The largest grants, totalling £9.2bn, are to local police forces across England to supplement the council tax precepts they raise locally. Other grants include £1.7bn to top up police pensions, £0.4bn to top up fire and rescue services pensions, £3.3bn in other operating grants (many of which also go to police forces, in addition to transfers to other government departments) and £209m in capital grants.

Purchases of goods and services of £4.3bn is dominated by the £3.1bn paid in relation to asylum and detention, together with £287m in facilities management and staff services, £229m on professional fees, £219m for media and IT, £169m for passport printing and stationery and £120m for visa and immigration commercial partners amongst other costs.

Staff costs of £2.4bn cover the costs of employing full-time equivalent averages of 41,607 permanent staff, seven ministers, seven special advisers, and 6,489 other staff during 2022/23. Wages and salaries amounted to £1.8bn, equivalent to an average full-time equivalent salary of £37,900. 

At 31 March 2023 there were 345 senior civil servants on salaries in excess of £70,000, of which 251 were between £70,000 and £100,000, 86 between £100,000-£150,000 and eight between £150,000 and £190,000. The average of seven government ministers who served during the year (a total of 22 different individuals!) earned the equivalent of an average annual salary not including pension entitlements of around £49,000 in addition to their parliamentary salary or House of Lords attendance allowances.

Other operating costs of £3.0bn include £1.6bn on IT and accommodation-related service charges, £0.7bn for depreciation and amortisation of assets, and £113m in asset recovery costs together with other costs.

Parliamentary funding net of other items of £19.2bn is reported in the consolidated statement of taxpayers’ equity and comprised £19.4bn in drawn-down parliamentary funding, £0.3bn in deemed funding less £0.5bn in amounts repayable.

Not shown in the chart is the Home Office’s consolidated balance sheet, which comprised £2.6bn in non-current assets, trade and other receivables of £0.7bn and cash and cash equivalents of £0.6bn less trade and other payables of £3.7bn, £0.6bn in lease liabilities and £0.5bn in provisions to give net liabilities of £0.9bn. 

Reported in the notes to the accounts are £0.8bn in capital additions, of which £374m was incurred on software and other intangible assets.

Find out more: Home Office annual report and accounts: 2022 to 2023.

This chart was originally published by ICAEW.

ICAEW chart of the week: Smoking in the UK

My chart of the week looks at how the prevalence of smoking in the UK population has continued to decline over the past decade.

Column chart showing the proportion of adults in the UK who smoke cigarettes.

2011: 20.2%
2012: 19.6%
2013: 18.8%
2014: 18.1%
2015: 17.2%
2016: 15.8%
2017: 15.1%
2018: 14.7%
2019: 14.1%
2020: 14.0%
2021: 13.3%
2022: 12.9%

14 Sep 2023.
Chart by Martin Wheatcroft FCA. Design by Sunday.

Source: ONS, 'Adult smoking habits in the UK: 2022'.

The Office for National Statistics (ONS) has recently published its latest statistics on adult smoking habits in the UK, showing a continuing decline in the prevalence of smoking in the UK population over the past decade or so.

As my chart this week highlights, the proportion of those aged 18 or over in the UK who smoke cigarettes has fallen from 20.2% in 2011 to 19.6% (2012), 18.8% (2013), 18.1% (2014), 17.2% (2015), 15.8% (2016), 15.1% (2017), 14.7% (2018), 14.1% (2019), 14.0% (2020), 13.3% (2021) and 12.9% in 2022.

Over this period the decline is dramatic, with the respective proportion of men and women smoking down from 22.4% and 18.2% in 2011 to 14.6% and 11.2% in 2022.

The proportion of people smoking in all age groups has fallen over the past 11 years, with those aged 18-24, 25-34, 35-44, 45-54, 55-64 and 65+ who smoke declining from 25.7%, 25.8%, 23.3%, 21.6%, 18.5% and 10.2% in 2011 to 11.6%, 16.3%, 14.5%, 14.3%, 13.6% and 8.3% in 2022.

While the government and anti-smoking campaigners will be pleased by the continued progress in persuading people to give up smoking, they will be more concerned by the increase in the numbers vaping, particularly among those in their late teens and early 20s.

The proportion of those aged 16 or over in Great Britain who use e-cigarettes on a daily or occasional basis increased from 6.4% in 2020 to 8.7% in 2022. For those aged 16-24, 25-34, 35-49, 50-59 and 60+ the increase was from 7.0%, 8.6%, 7.5%, 7.9% and 3.5% in 2020 to 15.5%, 10.6%, 9.5%, 8.5%, 4.4% in 2022. (These percentages are not properly comparable with the smoking statistics as they are for a different comparator period, include those aged 16 and 17, are for different age bands, and exclude Northern Ireland.)

The continued decline in smoking has had a consequent impact on tobacco duty as despite a 70% rise in tobacco duty rates between 2011 and 2022, the amount collected has declined from £9.9bn in 2011/12 to £9.4bn in 2022/23, a drop in cash terms of 5% and in real terms of 26%.

Read more

This chart was originally published by ICAEW.

ICAEW chart of the week: GDP revisions

This week’s chart takes a look at recent revisions to GDP that have caused some consternation in the world of statistics.

Combination of a column chart horizontally and a step chart vertically.

Top section: GDP reported in Blue Book 2022 for 2019, 2020 and 2021:

2019: £2,238bn -5.7% = 2020: £2,110bn +7.6% = 2021: £2,270bn

(2020 -5.7% nominal, -11.0% growth, 2021 +7.6% nominal, 7.6% growth)

Middle section: GDP revisions

 2019: -£4bn, 2020: -£6bn, 2021: +£14bn

Bottom section: GDP to be reported in Blue Book 2023

2019: £2,234bn -5.8% = 2020: £2,104bn +8.5% = 2021: £2,284bn

(2020 -5.8% nominal, -10.4% growth, 2021 +8.5% nominal, 8.7% growth)

Each year the Office for National Statistics (ONS) publishes the ‘Blue Book’ on the national accounts, its definitive analysis of economic activity over the course of the previous year. This analysis supersedes the preliminary and revised monthly and quarterly estimates issued up until that point, based on extensive analysis by the official statisticians.

The 2023 edition of the Blue Book is scheduled to be published on 31 October 2023. It will be eagerly pored over by economists in and outside government who will be eager to understand how the UK economy performed during 2022, and how this ‘final’ version of the 2022 numbers line up with those preliminary and revised estimates, just as they did last year when looking at GDP for 2021.

However, in the world of statistics numbers are never final. On 1 September 2023, the ONS announced methodological and data improvements to last year’s Blue Book – the numbers for 2021 and earlier years. These prior-period adjustments partly reflected a methodology change in the way the three different methods of calculating GDP (output, income and expenditure) are reconciled, but much more significant were revisions to the data used to calculate some of the key statistics, causing much wailing and gnashing of teeth by some prominent economic commentators as the narrative around the UK’s emergence from the pandemic changed.

As our chart this week illustrates, the revisions to GDP do not at first sight appear to be that significant. GDP for 2019 has been revised down by £4bn from the previously reported £2,238bn to a new official number of £2,234bn; GDP for 2020 is £6bn down from £2,110bn to £2,104bn; and GDP for 2021 has been revised up by £14bn from £2,270bn to £2,284bn. These seem relatively small changes when looking at trillions of pounds of economic activity.

Where the change really has an impact is in looking at the trends, especially after adjusting for inflation. On a nominal basis, a 5.7% nominal decrease in 2020 followed by a 7.6% increase in 2021 has changed to a 5.8% decrease and an 8.5% increase, but in real terms the previously reported economic contraction of 11.0% in 2020 followed by a 7.6% recovery has changed to a smaller contraction of 10.4% followed by a stronger recovery of 8.7%.

Of course, the devil is in the detail and some of the revisions at an industry level have been much more dramatic, with wholesalers and retailers now believed to have grown more strongly than previously believed, while the iron and steel industry changed from growth to contraction.

Many economic commentators have focused on the change in quarterly GDP (not shown in the chart) where the arithmetical changes have been more pronounced. The movement from the fourth quarter of 2019 (previously £568bn, now £566bn) and the fourth quarter for 2021 (previously £593bn, now £597bn) has gone from a 4.4% increase over two years to a 5.5% increase; in real terms from a 1.2% contraction in the economy to growth of 0.7%. Still anaemic, but at least in positive territory.

Despite this small improvement in the economic story portrayed by the GDP statistics, we should not get too carried away. Economic growth remains well below the pre-financial crisis levels and the public finances are in a significantly worse state than they were back in 2008.

In the meantime, the Office for Statistics Regulation has commenced a review into how these small revisions with big implications for our understanding of the economy were not identified at the time.

Further reading 

This chart was originally published by ICAEW.

ICAEW chart of the week: BRICS+

The ICAEW chart of the week returns from its summer holidays to look at the planned expansion of BRICS from five to 11 countries.

Venn diagram showing the G20, G7, BRICS, and BRICS+:

G20 in green, encompassing G7 in teal with USA, Japan, Canada and UK plus in blue with dotted line around Germany, France, Italy and the European Union (the EU members of the G7).

Then five countries in G20, but not in the G7, BRICS or BRICS+, being Korea, Australia, Mexico, Indonesia and Türkiye.

Tne BRICS+ in purple with Argentina and Saudi Arabia followed by BRICS in orange with Brazil, Russia, India, China and South Africa. Still in the BRICS+ purple, but outside the G20 green are Ethiopia, Iran, Egypt and UAE.

Sources: G20, G7, BRICS.

Footnote gives share of global GDP: G20 86%. G7 52% (USA 26%, EU 17%), KAMIT 7%, BRICS 25%, BRICS+ 28%.

“The BRICs” was originally coined by Jim O’Neill in 2001 as an abbreviation for Brazil, Russia, India and China, four fast-growing economies that he predicted would come to dominate the world economy.

This investment shorthand evolved into something more substantive in 2006 when ministers from the four countries got together on the sidelines of a meeting at the UN. Leader summits started in 2009, followed by the addition of South Africa in 2011, which resulted in the capitalisation of the final ‘s’ to form BRICS. 

BRICS has developed over time to become a counterweight to the G7, providing an alternative forum for leaders of these five major nations to discuss common concerns such as economic development, currency stability, climate change, and tackling drug trafficking and organised crime. BRICS has been increasingly important to Russia since its ejection from the G7 (then the G8) following its invasion of Crimea in 2014 and to China as relations with the G7 have deteriorated over the last decade.

The most recent summit (the 15th) was on 22-24 August 2023, at which it was announced that six additional countries would be joining on 1 January 2024 to bring the number of members to 11.

Our chart this week takes the form a Venn diagram to illustrate how BRICS, and the expanded “BRICS+” grouping (pending a new official name), fit with two other major intergovernmental organisations where leaders meet on a regular basis – the G7 and the G20.

It starts with the G20, a grouping of 19 nations and the European Union that together represent 86% of the global economy. Within this sit the eight members of the G7 group of advanced economies, representing 52% of the global economy: the USA (26%), Japan (4%), the UK (3%), Canada (2%), Germany (4%), France (3%), Italy (2%) and the European Union (17% including Germany, France and Italy). The five BRICS nations represent 25% of the global economy comprising: Brazil (2%), Russia (1.7%), India (4%), China (17%) and South Africa (0.4%).

The diagram is complicated by the expanded BRICS+ as although invitees Argentina (0.6%) and Saudi Arabia (1.0%) are also members of the G20, the other four new members – Ethiopia (0.2%), Iran (0.3%), Egypt (0.3%) and the United Arab Emirates (0.5%) – are outside the G20. These new members together represent 3% of the global economy, taking the expanded BRICS+ to 28%.

Squeezed between the G7 and BRICS+ are five G20 members that together make up around 7% of the global economy that are not in either grouping, being (South) Korea (1.6%), Australia (1.6%), Mexico (1.8%), Indonesia (1.4%) and Türkiye (0.8%). As yet there is no sign of an intergovernmental organisation for these “KAMIT” nations to complement the G7 and BRICS, although in practice they are often invited as guests to G7 summits in addition to their participation in meetings of the G20.

The attraction of intergovernmental forums such as the G7, BRICS and the G20 is that they enable national leaders to engage directly with their counterparts on a wide range of topics, in contrast to the often narrower focus and more formal diplomatic structures of treaty-based international organisations such as the Organisation for Economic and Co-operation Development (OECD), the World Bank or the Organisation of American States (OAS) for example.

Their informal nature gives national leaders more flexibility to (for example) change their memberships without lengthy treaty negotiations or to work together on pressing issues of mutual concern. However, that informality also makes it difficult to create binding resolutions, which is perhaps why the global alternative reserve currency proposed at the first BRICS summit in 2009 had still not been implemented by the time of the 15th summit this August. 

Read more: G20G7BRICS.

ICAEW chart of the week: Whole of Government Accounts 2020/21

My chart this week looks at the £3.3trn of net liabilities presented in the UK government’s consolidated financial statements for the year ended 31 March 2021 that were finally published more than 27 months after the balance sheet date.

Two column chart showing assets and liabilities that make up net liabilities of £3.3trn reported in the Whole of Government Accounts 2020/21 at 31 March 2021:

Assets £2.2trn

Fixed assets £1.3trn
Receivables £0.2trn
Investments £0.4trn
Financial assets £0.3trn

Liabilities (£5.5trn)

Financial liabilities (£2.6trn)
Payables (£0.2trn)
Provisions (£0.4trn)
Pensions (£2.3trn)

The UK’s Whole of Government Accounts for the year ended 31 March 2021 were published and submitted to Parliament on 20 July 2020, more than 27 months after the balance sheet date. These are consolidated financial statements prepared in accordance with International Financial Reporting Standards (IFRS) that incorporate the financial results of more than 10,000 public bodies in the UK across central government, local government, and other parts of the public sector. 

The Whole of Government Accounts provide a much more comprehensive picture of the financial performance and position of the UK public sector than is presented in the statistics-based National Accounts, using a financial language familiar to millions of users of financial reports in the private sector. 

As our chart this week highlights, the statement of financial position (balance sheet) of the UK public sector at 31 March 2021 was in heavily negative territory with £3.3trn in net liabilities, comprising assets of £2.2trn less liabilities of £5.5trn. This compares with net liabilities of £2.8trn a year earlier.

Assets of £2.2trn comprised £1.3trn in tangible and intangible fixed assets, £0.2trn in receivables and other non-financial assets, £0.4trn in non-current investments and £0.3trn in cash and other current financial assets. Liabilities of £5.5trn comprised £2.6trn in debt and other financial liabilities, £0.2trn in payables, £0.4trn in provisions and £2.3trn in net pension obligations.

Fixed assets of £1,313bn consisted of infrastructure assets of £677bn, land and buildings of £409bn, plant and equipment of £184bn, and intangible assets of £41bn. Receivables and other non-financial assets of £218bn comprised £164bn in tax receivable and accrued, £39bn in other receivables, prepayments and accruals, and £15bn in inventories. Non-current investments of £360bn comprised £152bn in loans and deposits, £85bn in student loans, £44bn in equities, £60bn in other financial investments, £16bn in investment properties, and £3bn in assets held for sale. Cash and other current financial assets of £317bn comprised £40bn in cash and cash equivalents, £12bn in gold, £129bn in debt securities, £101bn in loans and deposits, and £35bn of other financial assets.

Debt and other financial liabilities of £2,639bn comprised £1,265bn in externally held gilts, £203bn in direct borrowing from the public through National Savings & Investments, £53bn in short-term treasury bills, £815bn in Bank of England deposits, £84bn in bank and other borrowing, £85bn in banknotes, £27bn in derivatives, £20bn in financial guarantees, and £87bn in other financial liabilities. Payables of £221bn comprised £44bn in trade and other payables, £81bn in accruals and deferred income, £55bn in tax refunds, and £41bn on PFI, finance leases and other contracts. Provisions of £366bn consisted of £159bn for nuclear decommissioning, £87bn for clinical negligence, £36bn for payments to the EU, £29bn for the Pension Protection Fund, and £55bn in other provisions for liabilities and charges. Net public sector pension obligations of £2,306bn comprised £2,168bn in unfunded pension obligations (including £792bn for the NHS, £501bn for teachers, £339bn for the civil service, £254bn for the armed forces, £209bn for police and fire services, and £73bn other) and a net £138bn (£479bn of obligations less £341bn in fund assets) for local government and other funded pension schemes. 

Not shown in the chart is the revenue and expenditure statement, which reported revenue of £732, expenditure of £1,063bn and finance and other items of £73bn to give a net accounting loss for the year of £404bn – more than twice the £192bn loss reported for the pre-pandemic year. The financial statements covered the first year of the coronavirus pandemic, which saw income fall and costs soar, resulting in net borrowing during the year of £524bn according to the cash flow statement.

The Whole of Government Accounts is probably the most important report published by the UK government each year, but you wouldn’t have known that by the lack of fanfare on its publication amid the wave of hundreds of other documents released ahead of the parliamentary recess. This may be driven by understandable embarrassment by the length of time it has taken to prepare them – more than 27 months after the balance sheet date compared with the nine months that is its long-term aim – as well as by the gaps in preparation caused by local authorities and other public bodies that are substantially behind in producing their individual financial statements, leading to an additional audit qualification for completeness this year.

Despite that, and the other audit qualifications that highlight problems with the numbers reported, every citizen ideally should read the Whole of Government Accounts 2020/21. After all, it tells the financial story of the most dramatic year in recent history.

Read more: Whole of Government Accounts 2020/21.

This chart was originally published by ICAEW.

ICAEW chart of the week: OBR long-term fiscal projections

The OBR’s July 2023 fiscal risks and sustainability report indicates that, without higher taxes, public sector net debt as a share of GDP could triple or more over the next 50 years.

Column chart with bars equal to projected public sector net debt / GDP:

2022/23 Baseline projection: 101%
2072/73 Baseline projection: 310%
2072/73 + spending pressures: 385%
2072/73 + interest rate sensitivity: 376%
2072/73 + 21st century shocks: 435%

The Office for Budget Responsibility (OBR) published its latest fiscal risks and sustainability report on 13 July 2023, providing its analysis of the key risks confronting the UK public finances and long-term fiscal projections for the next 50 years.

This is a sobering report, suggesting that public sector net debt as a share of economic activity as measured by GDP could more than triple between March 2023 and March 2073 – and perhaps go even higher in certain circumstances. The OBR concludes that the public finances are on an unsustainable path.

As illustrated by this week’s chart, the OBR’s baseline projection suggests that the ratio of public sector net debt to GDP could rise from 101% of GDP in 2022/23 to 310% of GDP in 2072/73. The OBR also presented three alternate scenarios: the first is based on higher levels of spending, which could result in the ratio reaching 385% of GDP; one involves higher interest rates, where the ratio might reach 376% of GDP; and a further scenario assuming additional economic shocks, where the ratio might hit 435% of GDP.

The projections are based on the government’s current medium-term fiscal plans as set out in the March 2023 Spring Budget, extrapolated into the future based on existing trends. The starting point is the already high level of public debt that has built up over the past 15 years, together with the current government’s plan to cut spending on public services over the next five years.

The OBR has then overlayed its view of economic growth over the next half century and expected changes in patterns of public spending. This reflects a substantial rise in spending on pensions, health and social care as the proportion of the population in retirement rises, among other drivers that include the financial costs and benefits of delivering net zero. Other key assumptions relate to productivity, demographics (births, deaths and net migration), interest rates and inflation.

The one thing the OBR hasn’t been able to do is to include probable but not enacted tax changes in its projections, with increases in public spending assumed to be financed by higher levels of borrowing instead of the tax rises that future governments are in reality going to opt for. 

The projections therefore reflect borrowing that compounds over time to result in some very large headline debt numbers in March 2073, rather than the 1.5% of GDP rise in the tax burden each decade that would, according to the OBR, maintain the debt to GDP ratio at close to its current level.

The fiscal projections calculated by the OBR highlight just how difficult a position the UK’s public finances are in and the major fiscal challenges that will face the incoming government – whoever that may be – after the next general election.

This chart was originally published by ICAEW.

ICAEW chart of the week: National Savings & Investments

My chart this week is on the £218bn balance sheet of the state-owned retail financial institution that borrows from the public to help fund the UK government.

While the bulk of the UK national debt is financed through the sale of government bonds primarily purchased by institutional investors, the UK government also borrows money directly from the public through its in-house ‘bank’, National Savings & Investments (NS&I). 

Originally established as the Post Office Savings Bank in 1861, NS&I has a long history of funding the UK government, for example through the sale of war bonds direct to the public in the twentieth century. Today it is a non-ministerial department for its banking or ‘product’ activities, managed by an executive agency of HM Treasury of the same name.

As my chart this week illustrates, NS&I’s product assets as of 31 March 2023 of £218bn were balanced by its liabilities. As a government-backed financial institution, it is not technically a bank and so does not need to maintain equity reserves, unlike commercial banks.

The primary job of NS&I is to attract money from the public to help finance the government’s operations, with a total of £215bn lent to the National Loans Fund as of 31 March 2023. This lending formed the bulk of the NS&I’s product assets, with the balance of assets of £3bn comprising mostly cash together with some receivables.

Liabilities of £218bn on 31 March 2023 were owed to depositors, comprising £123bn in Premium Bonds, £60bn in other variable rate savings products, an estimated £20bn in Index-Linked Savings Certificates, and £15bn in fixed-interest certificates and bonds.

Premium Bonds were introduced in 1956 and (from the NS&I’s perspective) pay a variable rate of interest (currently 4.00%). From a savers’ perspective, however, bonds do not attract any interest at all and instead represent a refundable ticket to a regular tax-free prize draw, with a 22,000 to 1 chance of winning a prize each month, ranging from £25 up to £1m.

Other variable rate savings products include £32bn in on demand Direct Saver accounts that pay interest monthly (currently 3.40% gross/3.45% AER), £20bn on demand Income Bonds paid annually (currently 3.40%), £5bn in ISAs (paying 2.40%) and Junior ISAs (paying 3.65%), and £3bn in Investment Account (paying 0.85%) and legacy savings products that pay either 0.25% or 0%.

Index-Linked Savings Certificates of approximately £20bn (the exact number is not disclosed) are no longer on sale. They are of three years’ duration and can be rolled over by existing holders. These typically attract interest equivalent to Consumer Price Inflation + 0.01% AER, a very low amount in the last decade, but of course much more recently.

Fixed rate liabilities of £15bn principally comprise £12bn in Guaranteed Bonds, £2bn in Fixed Interest Savings Certificates and £1bn in Green Savings Bonds. Guaranteed Bonds are one-year fixed-term fixed interest accounts, with Guaranteed Income Bonds that today pay 3.90% gross/3.97% AER in monthly instalments and Guaranteed Growth Bonds that pay 4.00% on maturity, higher than previous issues. Three-year Fixed Interest Savings Certificates are no longer on sale but can be rolled over by existing holders, however savers can opt instead for three-year Green Savings Bonds, with issue 4 on sale at a fixed interest rate of 4.20% credited annually. 

The above numbers do not include NS&I’s separate executive agency operational balance sheet that comprised £0.18bn in assets, £0.15bn in liabilities and equity of £0.03bn on 31 March 2023.

The £218bn lent by the public to NS&I is equivalent to 7.7% of public sector gross debt of £2,836bn on 31 March 2023. While this may seem relatively small in comparison to the £1,320bn in British government securities (gilts) and other debt securities and loans that have been raised from institutional debt investors, or the £1,298bn in currency and central bank deposit liabilities, NS&I provides both a useful public service and a useful alternative source of funding.

Prime Minister Henry Temple (Viscount Palmerston) and Chancellor of the Exchequer William Gladstone would no doubt be extremely pleased to see that their creation was still funding the nation 162 years on. Even if, with £10bn in net new deposits received during the year ended 31 March 2023, it is an increasing liability.

This chart was originally published by ICAEW.

ICAEW chart of the week: How we spend our time

Time may be relative, but that doesn’t stop our national statisticians from attempting to track what we do each and every minute of the day.

Doughnut chart adding up to 24 hours:

Sleep and rest: 8.9 hours
Personal and family: 2.9 hours
Household: 2.6 hours
Work and study: 4.2 hours
Leisure and other: 5.4 hours

According to the Office for National Statistics (ONS), adults in the UK spend 24 hours each day on a wide range of activities.

Our chart this week analyses how we spend our time divided into five broad categories, starting with sleep and rest, which takes up 8.9 hours a day on average, followed by 2.9 hours on average spent on personal and family activities. Unpaid household work takes up 2.6 hours, while work and study absorbs a further 4.2 hours, leaving an average of 5.4 hours for leisure and other activities.

These numbers are averages across the whole week, including weekends, and are based on all adults from the age of 18, including those who have retired.

The statistics are more detailed than shown in the chart with personal and family time of 2.9 hours breaking down into 2.4 hours on personal care, 0.4 hours on unpaid childcare, and 0.1 on unpaid adult care. Personal care in turn can be further analysed into 1.3 hours spent eating and drinking, 0.9 hours on washing, dressing, using the bathroom or self-grooming, 0.1 hours on medication or other health-related care, and 0.1 hours in other personal activities.

The average amount of time spent on work and study of 4.2 hours comprises an average of 1.0 hours travelling, 2.1 hours working away from home, 0.8 hours working from home, and 0.3 hours on study. 

Leisure and other activities of 5.4 hours a day include an average of 3.7 hours in entertainment, socialising and other free time, 0.8 hours using a computer or other device, 0.3 hours on exercise, sports and wellbeing, 0.2 hours on DIY or gardening, 0.1 hours volunteering and 0.3 hours on other activities.

These numbers are averages over the course of a year and how we spend our time will of course vary according to age, gender, employment or study status, physical health, lifestyle and personal interests, as well as by time of year such as when we are on vacation. 

The one constant, at least on our planet’s surface, is that we have only a total of 24 hours to work with. Within that limitation, how to spend our time wisely, or perhaps even enjoyably, will always be a challenge.

This chart was originally published by ICAEW.

ICAEW chart of the week: South Korea

My chart this week looks at the economic success story of South Korea over the last 30 years or so, using Japan as a comparator.

Line chart showing GDP per capita in current US$ between 1990 and 2023.

Japan $2,158 in 1990, steady up to 1995 then zigzags ups and down and up and down and up to a peak in 2012 before falling to 2015 then up then flattish then down and then up to $2,949 in 2023.

South Korea $551 in 1990, steady up to 1996, then down to 1998 then up then down then steady up to 2007, then down to 2009, then zig zag up to 2021, then down, then up to $2,783 in 2023.

The news that South Korea, to align with most of the rest of the world, is cutting the age of its citizens by a year or two – it used to deem a baby one year old at birth, and add a year on 1 January – prompted us to take a look at this peninsula nation and its amazing economic success story.

As my chart this week illustrates, GDP per capita in 1990 in South Korea was $551 per month in then current US$, approximately one quarter of its neighbour Japan’s GDP per capita per month at that time of $2,158

South Korea has seen its economy grow pretty strongly over the last three decades to reach a forecast GDP of $2,783 per person per month for the current year according to the International Monetary Fund (IMF). This is only a little below the economic activity of $2,949 per person per month anticipated to be generated by Japan in 2023. 

South Korea has made steady economic progress since 1990. Outside of recessions and pandemics there have been continual improvements in economic activity and in living standards, resulting in the country moving from the developing nation category to an advanced economy.

This compares with the economic performance of neighbouring Japan, which has been on an economic rollercoaster since the end of the economic boom in the mid-1990s. While a strong currency in the run-up to the global financial crisis boosted the size of its economy in US dollar terms, Japan has subsequently underperformed as its ageing population and lack of immigration has caused its economy to slow and the Yen to fall.

Not shown in the chart is the progress made in purchasing power parity (PPP) international dollars, the measure that economists prefer to use when comparing economic performance between countries as it takes account of differences in living costs. This would show a narrower difference in 1990, when South Korean and Japanese GDP per capita per month were 629 and 1,692 international dollars respectively, and would also show South Korea outgrowing Japan with GDP per capita per month in 2023 of 4,725 international dollars, compared with 4,317 international dollars for Japan.

Many South Koreans waking up on Wednesday 28 June 2023 will have been pretty happy to discover they are now a year or two younger than they were the day before. They may be less likely to reflect on the economic miracle that has taken their country from the depths of extreme poverty in the early 1950s, following the Korean War, to becoming the prosperous nation that South Korea is today. 

This chart was originally published by ICAEW.

ICAEW chart of the week: A big number

Public spending is expected to approach £1.2trn this year, an extremely large and incomprehensible number to most of us. Our chart this week attempts to make that number more digestible.

Chart labelled 'A big number' comprising nine boxes in a grid each with the same number in nine difference versions:

First row of three boxes

- £1.2bn for UK budgeted public spending in 2023/24
- equivalent to £99bn per month
- or £23bn per week

Second row:

- £1.2bn is equivalent to £41,600 per household in 2023/24
- or £3,470 per household per month
- or £800 per household per week

Third row:

- £1.2bn is equivalent to £17,400 per person for 2023/24
- or £1,450 per person per month
- or £335 per person per week

Public spending in the current financial year is budgeted to amount to £1,189bn or just under £1.2trn. But what does such a large number really mean? 

It can be difficult to comprehend the sheer scale of public spending that a major economy such as the UK incurs each year. The 2023/24 budget of £1,189,000,000,000 is just a huge amount of money to think about.

One way to understand the number is to break it down a little; knowing that the UK public spending is expected to be an average of £99bn a month or £23bn a week during the current financial year helps a little. However, smaller but still exceptionally large amounts can be equally difficult to understand.

The traditional way to look at the public finances, not shown in the chart, is to relate it to the size of the UK economy. GDP is projected to amount to £2,573,000,000,000 in 2023/24, meaning that public spending should be equal to around 46% of the overall economy. However, while this is helpful in putting public spending into context, it is still just a ratio between two incredibly large numbers that very few of us really comprehend. Surely there must be a better way of getting to grips with the public finances.

Our chart this week attempts to do so. By dividing the total for public spending by the number of households in the UK (expected to reach around 28.6m in September, the middle of the financial year) and by the size of the UK population (anticipated to be approximately 68.2m) as well as by month and by week, we can hopefully get a better a feeling for what is going on.

As our chart this week illustrates, average public spending in 2023/24 is equivalent to £41,600 per household, which breaks down to £3,470 per household per month or £800 per household per week, and it may be helpful to think about public spending. Whether you prefer to think in annual, monthly or weekly time periods, they are pretty big numbers in the context of most people’s household budgets.

Alternatively, you may find it easier to identify with how public spending in 2023/24 is equivalent to an average of £17,400 per person living in the UK, breaking down to £1,450 per person per month or £335 per person per week. Again, a very large number, particularly when you realise the average covers children as well as the adult population.

In some ways these much smaller versions of a big number – such as public spending of £3,470 per household per month – feel a lot larger when brought into a more relatable context. The figure of £1.2trn is baffling, but when you know the UK public sector plans to spend £800 per week for each of its 28.6m households, you get a better sense of just how much the UK state spends.

Of course, in working out averages it is important to be clear that they are just that – averages. Many people will benefit more, or less, from public spending than others, while conversely different groups will pay more or less in the taxes needed to fund that spending. Pensioners and children generally pay much less in taxes than those of working age, while benefiting from a much greater proportion of public spending. Similarly, poorer households will receive more in benefits and other forms of support, while richer households pay more in taxes. 

Despite that, per household and per person averages give us an opportunity to compare public spending with reference points we can relate to, such as our own salary or household budget.

One of the reasons the numbers are so high, whichever way you look at them, is that the state does an awful lot. Average spending planned of £1,450 per person per month can be broken down further to approximately £420 on pensions and welfare, £350 on health and social care, £160 on education, £140 on defence, security, policing and justice, £140 on debt interest, £75 on transport, and £165 per person per month on everything else. Each of these in turn are made up of hundreds if not thousands of different central and local government programmes, many costing mere fractions of a penny per person per month, but that together add up to a lot of money.

No matter how you break it down, public spending will always be a huge number.

This chart was originally published by ICAEW.